Customer-driven activities Departmental stores segment Hotel segment

Sales activity 8 sales visits 6 sales visits

Special handling 800 units handled 600 units handled

Special shipping 18 shipments 20 shipments

Order taking 15 purchase orders 20 purchase orders

Explanations on Customer-driven Activities

The purpose of sales visit to the customers was to obtain feedback on the products and, in the case of the departmental stores, to find out how the bedsheets were displaced in the stores. Special handlings involved any specific ways of packing requested by customers. These may include packing in different sizes to suit the shipping space or the use of better quality of packing materials to prevent damages caused by poor handling. Special shipping was normally requested in order to expedite the product delivery in order to meet an expected increase in demand due to, for example some festive seasons, or shortage of bedsheets in some cases due to poor inventory planning by the customers.

Required:

(a)Discuss, using information provided in the case, how the use of Activity Based Management (ABM) and Business Process Re-engineering (BPR) could help the management of BSL to improve competitiveness and profitability of the company.

( 15marks)

(b)Explain how BSL can use life cycle costing to estimate the cost its product more accurately.

( 10 marks)